For most investors, 2008 offered no places to hide
NEW YORK - There was one safe bet that mutual fund investors could make in 2008 - that the stock market was a place to lose a lot of money.
Funds' performance stats for the year to date show that Wall Street's decline was so punishing that investors had almost nowhere to hide. A majority of fund categories had negative returns in the neighborhood of 40 percent, and some categories dedicated to financial services and natural resources had negative returns of 50 percent or more, according to Lipper Inc., which tracks fund performance.
Lipper, whose tallies reflect trading through Wednesday's session, found that what are known as bear market funds, which wager that stocks will fall, were among the few successes this year.
The results confirm what many investors already know from their 401(k) account statements and from tracking the market's major indexes. The Standard & Poor's 500 index, the benchmark for many funds, was down 40.88 percent through Wednesday, while the Dow Jones industrials were down 36.16 percent.
Wall Street's heaviest selling came in September and October after the bankruptcy of Lehman Brothers Holdings Inc. The brokerage's collapse under the weight of soured investments triggered a freeze-up of lending and deepened Wall Street's fears about the depths of the recession.
Although Lipper's figures don't include the last four trading days of the year, the funds' performance isn't likely to change substantially.
The chaos in the financial markets wiped out gains that some market sectors were building on into 2008. While the commodities markets shot higher in the first half, giving a lift to funds that focused on natural resources and raw materials, the abrupt turnaround in commodities - including crude oil's drop from $147 a barrel to $35 - plunged those funds into the same depths as more diversified funds.
Financial services funds, which suffered as banks and insurance companies were pummeled by the credit crisis and the collapse of Lehman and Bear Stearns Cos., had a negative return of 46.90 percent for the year and 32.10 percent for the quarter.
Defensive areas like utilities did well by comparison. Utility funds produced negative returns of 36.37 percent for the year after a negative return of 17.21 percent in the final quarter.